The Organization of the Petroleum Exporting Countries (OPEC) on Monday raised its forecast for global oil demand in 2022 on the back of strong economic recovery prospects, while revising downward its demand expectations for the final quarter of this year due to pandemic-related factors.
OPEC said in its monthly market report, released on Sept. 13, that it expects oil demand to average 99.70 million barrels per day (bpd) in the fourth quarter of 2021, down 110,000 bpd from last month’s projections.
“The increased risk of COVID-19 cases primarily fueled by the Delta variant is clouding oil demand prospects going into the final quarter of the year,” OPEC said in the report.
“As a result, second-half 2021 oil demand has been adjusted slightly lower, partially delaying the oil demand recovery into first-half 2022.”
At the same time, OPEC sees the world’s thirst for oil going up by 4.2 million bpd in 2022 to 100.8 million bpd, mostly on the back of a “steady economic outlook in all regions.” The upward revision for 2022 amounts to 980,000 bpd over last month’s estimate and a rebound in demand to above pre-pandemic levels.
OPEC’s forecast assumes global GDP rising by 4.2 percent in 2022, with the cartel cautioning that there are risks to this outlook.
“A further rise in COVID-19 infections, especially considering the upcoming winter season in the Northern Hemisphere, could dampen current growth projections,” OPEC said in the report, adding that ongoing supply chain disruptions, inflationary pressures, and rising government debt levels also “require close monitoring.”
Oil prices went up on Monday, with Brent crude rising 47 cents, or 0.64 percent, to $73.42 a barrel by 11:55 a.m. New York time on Sept. 13, while U.S. West Texas Intermediate (WTI) crude was up 61 cents, or 0.87 percent, at $70.33.
The U.S. Energy Information Administration (EIA), expects WTI prices to average $62.37 per barrel in 2022, down from $65.69 in 2021, while Brent crude prices are forecast to fall to an average of $66.04 per barrel next year from $68.61 this year.
Meanwhile, U.S. retail gasoline prices rose to their highest level in seven years.
Retail gasoline prices in the United States averaged $3.16 per gallon in August, the highest monthly average since October 2014, according to the U.S. Energy Information Administration (EIA). For the week of Sept. 6, the national average for a gallon of regular gasoline rose to a seven-year high of $3.176 from $3.139 the week prior, according to the EIA, which projected that hurricane-related supply disruptions in the Gulf of Mexico would continue to pressure prices in the near term.
According to the agency’s most recent short-term energy outlook, retail gasoline prices are expected to average $3.14 per gallon in September before falling to an average of $2.91 per gallon in the fourth quarter of this year, an encouraging sign for drivers hoping for relief at the pump.